Market segmentation involves dividing a large heterogeneous market into smaller homogeneous segments based on characteristics like geography, demographics, psychographics, and behavior. The key steps are identifying segments, profiling them, selecting target segments, and positioning products to occupy a clear place in customers' minds. Marketers must choose segmentation variables to group customers with similar needs and select the most attractive segments to target based on size, growth, profitability, and organizational fit.

1. Market Segmentation
Dr. Gopal Thapa
Tribhuvan University

2. Market Segmentation
 Market Segmentation divides a market into well-
defined slices.
 A market segment consists of a group of
customers who share a similar set of needs and
wants.
 Marketer’s task is to identify the appropriate
number and nature of market segments and decide
which one(s) to target.
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3. Market Segmentation
 Market consists of buyers and buyers differ in ore
or more ways.
 They may differ in their wants, resources,
locations, buying attitudes, and buying practices.
 Through market segmentation, companies divide
large, heterogeneous markets into smaller
segments that can be reached more efficiently and
effectively with products and services that match
their unique needs.
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4. Segmentation, Targeting &
Positioning (STP)
 Market segmentation is dividing a market into
distinct groups with distinct needs, characteristics, or
behavior who might require separate products or
marketing mix.
 Target marketing is the process of evaluating each
market segment’s attractiveness and selecting one or
more segments to enter.
 Market positioning is arranging for a product to
occupy a clear, distinctive and desirable place relative
to competing products in the mind of target customers
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5. Market Segmentation Process
 Market survey
 Segment identification
 Segment profiling
 Segment selection
 Product positioning
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6. Segmentation Variables for
Consumer Markets
 Geographic variables
 Demographic variables
 Psychographic variables
 Behavioral variables
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7. Geographic Variables
 Area
 Development region, zone, district
 Topography/climate
 Mountain, hills, terai
 Temperate, alpine, tropical
 Population density
 Urban, sub-urban, rural market
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8. Demographic Variables
 Age
 Gender
 Family size
 Family lifecycle
 Education
 Occupation
 Income
 Social class
 Religion
 Ethnicity
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9. Psychographic Variables
 Buying motives
 Economy, durability, efficiency, convenience,
love, affection, friendship, belongingness, status,
respect, prestige, recognition
 Personality
 Introvert, extrovert, self-confidence, independent,
impulsive, masculine, feminine
 Lifestyle
 Activities, interest, opinion
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10. Behavioral Variables
 Product benefits
 Occasions
 User status
 Usage rate
 Loyalty status
 Marketing factor sensitivity
 Buyer-readiness stage
 Attitude
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11. Variables for Business Market
Segmentation
 Geographic variables
 Location, topography, climate
 Demographic variables
 Type of industry, size of customer
 Operating variables
 Technology, usage rate, service needed
 Purchase related
 Purchase organization, documentation, negotiation
period
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12. Evaluation of Market Segments
 Segment attractiveness
 Size and growth, profitability ,competition
,technology, customer loyalty, risks
 Organizational objectives and resources
 Segment Relations
 Inter-relationship
 Cooperation
 Ethical Considerations
 Government Policies
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13. Segment selection (Target
Marketing)
 Single segment coverage
 Multi-segment coverage
 Product specialization
 Market specialization
 Full market coverage
 Niche marketing
 Individual marketing
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15. Effective Segmentation Criteria
 Measurable
 Substantial
 Accessible
 Actionable
 Differentiable
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16. Positioning
 Act of designing the company’s offer and image
so that it occupies a distinct and value place in the
target customer’s mind
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17. Types of Positioning
 Attribute positioning
 Benefit positioning
 Image positioning
 Usage occasion positioning
 User positioning
 Competitive positioning
 Product class positioning
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